Gold Rises on Dollar Stabilization; and market awaits US inflation data.

Gold rose on Tuesday as the dollar stabilized, prompting some investors to buy the metal ahead of US inflation data that could weigh on the Federal Reserve’s monetary policy.

By 0958 GMT, spot gold was up 0.3% at $1,859.05 an ounce, recovering slightly after falling as much as 1.7% on Monday as the dollar rose. US gold futures were up 0.1% at $1,861.10 an ounce.

The dollar was flat after hitting a 20-year high on Monday, while 10-year Treasury yields fell off 3-1/2-year highs.

“Gold remains a hedge against a (possible) policy error and that continues to attract some buyers to these lower levels,” said Ole Hansen, an analyst at Saxo Bank.

“From a technical point of view, the key level of $1,850 has held on several occasions, so it is attracting some short covering”Hansen added.

Fears of a possible slowdown in the world economy, amid an aggressive tightening of monetary policies by the main central banks, and rising inflation have eroded confidence in world stock markets.

Although gold is viewed as a hedge against inflation and a safe haven during global political and economic uncertainties, it is highly sensitive to rising interest rates in the United States, which raises the opportunity cost of holding poorly performing bullion. interests.

Rising Treasury yields also tend to strengthen the dollar, dampening appetite for gold among foreign investors.

The US Consumer Price Index (CPI) will be released on Wednesday and will be closely watched for any influence on the Federal Reserve’s rate hike plans.

Downside risks to gold may be greater, as a high inflation figure could strengthen the case for an increase in the pace of Fed tightening and fuel further dollar gains, said Ricardo Evangelista, senior analyst at ActivTrades in a note.

Among other precious metals, spot silver rose 0.1% to $21.82 an ounce, platinum gained 1.8% to $972.88 and palladium added 1.3% to $2,124.63.